ROME/NEW DELHI March 22 (Reuters) - A decision to return two
Italian marines accused of murdering fishermen to stand trial in
India stirred anger in Italy on Friday and calls for Foreign
Minister Giulio Terzi to resign.

Mario Monti's caretaker government on Thursday reversed a
March 11 decision not to send the marines back from a home visit
after Rome secured a promise from New Delhi that the two would
not face the death penalty if convicted, officials said.

The marines, part of a military security team protecting a
tanker from piracy, are accused of shooting two fishermen off
the coast of the southern Indian state of Kerala in February
2012.

They say they fired warning shots at a fishing boat believing
it to be a pirate vessel.

The sailors, Salvatore Girone and Massimiliano Latorre,
arrived back in India on Friday, accompanied by Italian deputy
Foreign Minister Staffan de Mistura.

India and Italy have been embroiled in an escalating row
over the marines, who had been allowed home for Christmas, and
then again to vote in the Italian elections in February on
condition they returned to India by Friday.

"The good news is that the potential diplomatic crisis has
been avoided," De Mistura told a news conference in New Delhi.

But back in Italy the decision provoked an anguished
response. Michele Emiliano, the mayor of Girone's hometown of
Bari, said he had been comforting the marine's "despairing"
family.

"A hypocritical government is trying to end its
embarrassment by sending the sailors back to India after
exhibiting them as 'free' during the election campaign,"
Emiliano wrote on Twitter.

Foreign Minister Terzi defended the move in an interview
with La Repubblica daily on Friday, rejecting calls from
centre-right politicians for him to quit.

"I don't see a reason to" resign, he said, adding that the
temporary stand-off with India had helped Italy ensure the
marines would be treated well.

India's Supreme Court ruled in January that India had
jurisdiction to try the marines. But Italy had challenged that
decision, arguing that the shooting took place in international
waters and that the two should face any trial at home.

"We maintain our position on the marines and feel they
should face trial in Italy," De Mistura said. "We now want the
matter to be handled fairly and urgently."

INDIA HAPPY

Indian politicians welcomed Rome's decision to return the
marines. "We are happy with the outcome which is consistent with
the dignity of Indian judicial process," Indian Prime Minister
Manmohan Singh told reporters.

Italy's initial plan to not send the marines back had
exposed Singh's fragile coalition, which governs with a minority
in parliament, to opposition attacks that it was too soft and
had even colluded with Italy to allow the marines to leave.

The government had demanded Italy return the sailors or face
a possible rupture in ties.

India's chief justice went so far as to bar Italy's
ambassador from leaving the country, but behind the scenes,
Italian and Indian officials were trying to resolve the dispute.

"There have been very intensive diplomatic contacts between
Italy and India during the last 24 hours," said Indian foreign
ministry spokesman Syed Akbaruddin.

Details of the negotiations have not been disclosed but
Akbaruddin told Reuters that India and Italy had an agreement
under which convicted prisoners could serve jail time in their
home countries.

Foreign Minister Salman Khurshid said in parliament that
India had assured Italy that the marines would not face the
death penalty, which only applied in the "rarest of rare cases".

"Italy falls into line," crowed one Indian television cable
news channel, while cabinet minister Manish Tewari said Rome's
decision to return the sailors showed that India's "gravitas is
being recognised across the world".
(Reporting by Catherine Hornby, Steve Scherer in ROME and Ross
Colvin, Satarupa Bhattacharjya and Matthias Williams in NEW
DELHI; Editing by Nick Macfie and Rosalind Russell)